Powered by parks, Walt Disney Co. sets sales, profit records

November 7, 2013|By Jason Garcia, Orlando Sentinel

Walt Disney Co. reported another quarter of double-digit profit growth Thursday, boosted by higher summer prices for tickets and hotel rooms at Walt Disney World and the company's other theme-park resorts.

The results capped a fiscal year in which Burbank, Calif.-based Disney turned a profit of $6.1 billion, an 8 percent jump from 2012. Sales across the media-and-entertainment giant rose 7 percent for the year to $45 billion, another company record.

"It was another great year for the company, both creatively and financially, and we remain confident that we are well positioned to continue our strong performance and drive long-term shareholder value," Disney Chairman and Chief Executive Officer Bob Iger said in a prepared statement. Disney's fiscal year ended Sept. 28.

Companywide profit rose from $1.2 billion to $1.4 billion for the quarter, a 12 percent increase from a year ago. Sales rose 7 percent, to $11.6 billion.

Disney's theme parks and resorts were once again a primary growth engine as the company continued to benefit from new projects such as Walt Disney World's $425 million New Fantasyland and the $350 million Disney's Art of Animation Resort.

Operating profit at Walt Disney Parks and Resorts jumped 15 percent for the quarter, to $571 million, on revenue that rose 8 percent, to $3.7 billion.

Higher prices were the biggest driver of growth. Combined guest spending at Disney's parks in Orlando and Anaheim, Calif., rose 9 percent during the quarter on higher average ticket prices and increased food and merchandise sales. Per-room spending in its hotels — which are concentrated at Disney World — gained 4 percent on higher average nightly rates.

Disney said quarterly attendance rose at Disney World but dipped at Disneyland, which faced a difficult comparison with the huge crowds drawn to the summer 2012 opening of Cars Land, the Disney California Adventure attraction based on the Pixar film franchise. The company said hotel occupancy was comparable to last year's numbers, even though Disney's inventory has grown with the opening of the 2,000-room Art of Animation hotel.

Both Disney World and Disneyland set attendance records for the year, though the company did not release the figures.

Looking ahead, Disney said it is booking rooms in its hotels this quarter at a pace comparable to last year's and at prices 5 percent higher.

But on a conference call with analysts, Disney executives also tamped down near-term expectations for MyMagic+, the billion-dollar technology project at Disney World that includes wireless wristbands known as "MagicBands" and a new reservation system for rides.

Some analysts had expected MyMagic+ to begin generating returns for Disney during its 2014 fiscal year. But Disney Co. Chief Financial Officer Jay Rasulo said expenses associated with projects in its domestic parks — which, in addition to MyMagic+, include the completion of its Fantasyland expansion — will wipe out revenue gains generated by the projects next year. He pointed to rising costs as Disney installs more of the technological infrastructure for MyMagic+.

Disney executives have said previously that they expected to have MyMagic+ almost fully launched by the end of 2013. But Thursday, Rasulo said only that "we basically are continuing to roll forward with making this benefit available to more and more of our guests."

Still, Disney expressed confidence in both MyMagic+ and its other park investments.

"It really hasn't changed at all our perspective on the returns that we expect," Rasulo said.

Executives also said they have big expectations for Avatar Land, expected to open around 2017 at Disney's Animal Kingdom. Rasulo for the first time likened that project to the company's hugely successful rebuilding of Disney California Adventure, which was completed last year with Cars Land.

"You really have to think of Avatar Land in the way we discussed Cars Land," Rasulo said. "Avatar Land is playing a similar role in Disney's Animal Kingdom. We are converting that park into a full-day experience that goes into the evening."

Disney is developing Avatar Land while theme-park-industry rival Comcast Corp. is accelerating spending on NBCUniversal theme parks — particularly Universal Orlando, where business has flourished since the mid-2010 opening of the Wizarding World of Harry Potter.

Comcast executives have said in recent months that they plan to spend about $500 million annually on construction in their parks. And expectations are high across the industry for next year, when it will open a second Potter-themed land — and a fourth on-site hotel — in Orlando.

Asked about the potential threat posed by Comcast, Iger gave a somewhat terse response.